ORDER
Chittaranjan Satapathy, Member (T)
Page 0618
1. Heard both sides. The issue relates to valuation of agriculture pipes and fittings. The appellants have prayed for the following:
(a) that the reasons for giving different discounts have been elaborately listed in the impugned Order-in-Original No. 118/99 dtd. 31.8.1999 and hence, Dept.’s/Commissioner (Appeals) claiming/holding that no criteria exists for allowing different discounts is incorrect:
(b) that the discounts allowed to different buyers is not only known prior to removal of goods from factory but also such discounts have been allowed in the Central Excise Invoices itself;
(c) that the invoices indicate the list price, percentage of discounts and the volume of discounts and net sales price which is the assessable value known prior to clearance of goods from factory;
(d) that the Dept’s claim that discount in excess of minimum discount not admissible has no authority of law;
(e) that such differing discounts allowed is nothing but regional discounts which are permissible;
(f) that different prices charged to different buyers is permissible under Section 4 as long as price is the sole consideration for sale and further un-uniform discounts are permissible based on catena of judgments on the issue:
(g) that when, in the Appellant’s own case, Commissioner (Appeals) vide Order-in-Appeal No. A-454/94 dtd. 30.12.1994 has allowed such discounts and this order has also been accepted by Dept. vide letter No. TC/CEX-23/95/712 dtd. 30.3.1995, a view contrary thereto is not sustainable:
(h) that when, Ld. AC, through Order-in -Original dtd. 24.2.1997, has dropped 8 SCNs with identical charges and this order has not been appealed, against, Dept.’s Review Order was not correct and, hence, impugned order is hot sustainable based on various judgments on the issue;
Page 0619
2. The learned advocate for the appellants cites the following decisions in support:
(1) C.C.E., Calcutta v. Suntrack Electronics (P) Ltd.
– Appeal to Supreme Court when similar earlier order not appealed against by Revenue – Tribunal in the impugned order has relied upon its earlier order which the Revenue has not chosen to challenge – Appeal in present case thus not to be entertained, hence dismissed accordingly.
(2) Gujarat State Fertilisers Co. Limited v. Union of India and Ors. 1980 E.L.T. 397 (Guj.)
– Regional discount is essentially a discount which may vary between one purchaser to another depending upon the region in which they carry on business. Therefore, it is not necessary that it should be uniform. Since, it is being given as a percentage deduction from the list price, it is a ‘trade discount’ within the meaning of the explanation to Section 4 of the Central Excise Act.
– The Section 4 of the Central Excises Act does not in terms enact that the trade discount in order to qualify for deduction thereunder should be on a uniform basis to all wholesale purchasers at the factory gate. Any such view would require the addition of word ‘uniform’ before the ‘trade discount’ occurring in Section 4 which is not evidently permissible. Nor it would be advisable to read the requirement of uniformity even by implication.
– Even if trade discount is not uniformly given or is given at different rates to different purchasers, it cannot by itself disqualify it from being excluded for arriving at the assessable value so long as the lack of uniformity is not founded on any extra commercial considerations. To ignore the deduction of trade discount would amount to adding a non-existent fraction to the manufacturing profit which will artificially inflate the net assessable value for the levy of excise duty which is not legally permissible having regard to the basic concept of excise levy.
(3) Metal Box India Ltd. v. Collector of C.E., Madras
– The buyer who purchases small quantities of goods may stand in different class as compared to a buyer who purchases 90 per cent of manufactured goods. He would certainly form a separate and distinct class.
– The Tribunal was in error in taking the view that as trade discount was uniformly not given to all its customers by the assess, it was not a permissible deduction and it had to be reloaded in the price of the excisable goods. Even if trade discount is not uniformly given or is Page 0620 given at different rates to different purchasers, it cannot by itself disqualify it from being excluded for arriving at the assessable value so long as the lack of uniformity is not founded on any extra-commercial considerations.
(4) Collector of C.E., Bombay v. Spectrum Pharmaceuticals
– Valuation (Central Excise) – Discount – Special discount – Mere fact that the special discount is allowed only to the stockists, it cannot be disallowed when this discount was known prior to the date of removal of the goods.
– Valuation (Central Excise) – Discount – Additional discount/free bonus is admissible as uniformity in trade discount is not one of the criteria as held by Supreme Court in the case of Metal Box of India.
(5) Western India Ceramics Pvt. Ltd. v. C.C.E. & C., Baroda
– Valuation (Central Excise) – Class of buyers – Separate price could be charged on basis of region – Highest price in any region will not prevail for all clearances.
(6) C.C.E., Aurangabad v. Videocon International Ltd. 2005 (180) E.L.T. 312 (S.C.)
– Valuation (Central Excise) – Sales from Depots in different States
– Sales tax element in different States resulting in different prices – In states where assessee paying sales tax, amount of sales tax deducted from the price of the goods for payment of excise duty – In States where the assessee has exemption from sales tax, excise duty paid without deducting the sale tax element – Higher price in such State not applicable for sale throughout India from depots – Departments appeal rejected -CESTAT order upheld.
(7) Addisons Paints & Chemicals Ltd. v. Collector of C.E.. Madras 2002 (147) E.L.T. 1241 (Tri.-Del.)
– The price list prepared by the assessee disclosed that the particular percentage of the total price will be allowed as discount if the payment is made in cash or within certain time. It should, therefore, be taken that the purchasers were aware of the discount allowed depending upon when the payment of the price is made. Therefore, cash discount was admissible irrespective of whether each customer availed of the discount or not. Now it is settled position that trade discount need not be uniform if it was known and allowed at the time of clearance of goods.
Page 0621
3. We find merit in the submissions made by the appellants. They have passed on the actual discounts through different list price, such discounts have been given regionwise, productwise as well based on previous year’s performance. As submitted by them such discounts were earlier approved by the department and no appeals were filed. The discounts were also known prior to removal of goods and indicated in the excise invoices. There is also no evidence of any extra commercial consideration in grant of the impugned discounts. As such, we set aside the impugned order-in-appeal and restore the order-in-original.
4. Appeal is allowed.
(Pronounced in Court on 21.12.2005)